The policies in the manifesto – including giving voters the power to sack MPs, take over schools, own their own public services and veto council tax rises – represented the largest devolution of power from the state to the public in 30 years, the Tories claimed.

However, Mr Cameron faced questions over his plans to reduce the country's £1 trillion national debt after the 118-page document failed to spell out how the Tories would address the issue.

Last night the independent Institute for Fiscal Studies said it was likely the Tories would have to raise taxes during the next Parliament to pay for tax cuts the party has already committed itself to, including National Insurance, council tax and tax breaks for married couples.

Accompanied by his pregnant wife Samantha, Mr Cameron chose to launch what he described as an "optimistic and ambitious" manifesto at the derelict Battersea power station in London, chosen by the Tories as a symbol of the country's need for regeneration.

In stark contrast to Gordon Brown's attempt on Monday to persuade voters that only government could help them, Mr Cameron's central message was of the limits of state intervention.

"No government can solve all the problems on its own," he said. Instead, he claimed "people power" should be the principle engine of change.

Voters had been deceived for years by politicians who claimed they could help them at election time. The answer, Mr Cameron insisted, was to return state control of local institutions to the public.

Under the Tories you would be allowed to be "your own boss, sack your MP, run your own school, own your own home, veto council tax rises, vote for your police, save your local pub or post office, and see how the government spends your money".

Good and effective government could be achieved, the Tory leader said, even "when everyone knows there's no money". Adapting an advertising slogan used by the Sainsbury's supermarket chain, Mr Cameron said: "Good government costs less with the Conservatives."

He added: "Labour measure everything by money and how much they spend. How much of your money they spend – though they never remember to put it like that. We've had 13 years of it.

"Thirteen years of them going on television and never talking about what's actually happened or what real people have actually done. All they talk about is what they, the Government, have done. How much they, the Government, have put in. But it doesn’t work. And it’s out of date.’’

Recalling the words of John F Kennedy, Mr Cameron went on: “As that American President once said: 'ask not what your country can do for you – ask what you can do for your country.” But he shunned the idea that society was all about the individual and instead urged people to join “together” to tackle the problems facing Britain. His criticism of “unchecked individualism” will be seen as a direct rejection of Margaret Thatcher’s assertion that there was “no such thing as society”.

Mr Cameron’s commitment to a smaller public sector marks a clear dividing line between the Conservatives and Labour. Total public spending was £419?billion or 36.2 per cent of the economy when Labour came to power. Last year, it reached £629?billion, 39.3 per cent of the economy. Last night Lord Mandelson, who is running Labour’s election campaign, said: “When the Tories say 'we’re all in this together’, what they really mean is 'you’re on your own’.’’

A Populus poll for The Times suggests the gap between the Tories and Labour is closing, with the Conservatives down three points on 36, Labour up one point on 33 and Lib Dems unchanged on 21.